10 Minute Guide to Project Management Part 3

Lesson 7. Gantt Charts. In this lesson, you learn what a Gantt chart is, why it is so useful in project management, variations you can devise, and how to use Gantt charts to keep your project on schedule.

Nội dung Text: 10 Minute Guide to Project Management Part 3

Lesson 5. Assembling Your Plan
In this lesson, you learn how to further refine your work breakdown structure (WBS), whether your
labor should be part of the WBS, the importance of reintegrating project staff as the project winds
down, and distinctions between the WBS and other planning tools.
The Critical Path for Completing the WBS
Before a project was assigned to you, an authorizing party or committee determined that it needed
to be executed. They allocated resources to the project. At the least, initially this included costs of
your services. They may have also formally or informally made assignments of plant, equipment,
and human resources to the project.
Plain English
Critical path
The longest complete path of a project.
At some point you were summoned. You discussed the desired objective, how long the project will
take, the key events in pursuit of the final objective, and whether or not the project should have
distinct phases. Perhaps a feasibility study was already done. Maybe there were notes and other
documents that enabled you to get a running start as to what you would be required to do. Often,
your initial assignment is to define your own role and present your definition to the authorizing
party or committee.
Once the decision was made to launch the project, and once you were given the formal go-ahead,
laying out your plan, developing the WBS, and presentation to your superiors became the order of
the day, such as that depicted in the chart shown in the figure below.
Laying out the plan.

The basic activities involved to complete the WBS are as follows:
● Identify the events or task and subtasks associated with them. They are paramount to
achieving the desired objective.
● Plot them using an outline, a tree diagram, or combination thereof to determine the most
efficient sequence.
● Estimate the level of effort required (usually in terms of person days) and start and stop
times for each task and subtask.
● Identify supporting resources and when they can be available, how long they are available,
and when and how they must be returned.
● Establish a budget for the entire project, for phases if applicable, and possibly for specific
events or tasks.
● Assign target dates for the completion of events or tasks known as milestones.
● Establish a roster of deliverables, many of which are presented in accordance with
achieving or are analogous to milestones.
● Obtain approval of your plan from the authorizing party. See the chart in the figure below.

Laying out your plan.
The Chicken or the Egg?
Preparation of your work breakdown structure (WBS) and the actual commencement of project
activities is a chicken-versus-egg issue. For example, many experts advise that you first identify
staffing resources and then proceed with the work breakdown structure. Following that approach,
the opportunity to allocate staff as necessary comes first, followed closely by budget allocations.
CAUTION
Until you plot exactly what needs to be done, you can't allocate staff hours.
Some experts advise creating the WBS independently of staff allocations. First, you identify what
needs to be done, and then you assemble the requisite staff resources based on the plan that
you've devised. I recommend the latter, because it is a more pure approach to laying out and
assembling your plan—you identify needs first and then allocate appropriate staff resources.

When does it make sense to start with the staff in mind?
● When they are all full-time
● When the project is relatively short
● When the project is labor intensive or requires a lot of expensive equipment
● When you are relatively certain that you have all the skills and experiences you need within
the existing allocated staff
Is Planning Itself a Task?
Another chicken-versus-egg issue to consider is whether or not planning itself represents a task to
be included on the WBS. Experts argue that especially for large and involved projects, planning
can represent a variety of tasks or events or even subtasks. Planning can even be synonymous
with a project phase. For example, depending on what you're trying to achieve, the outcome of
Phase I might be to develop a plan which will be crucial to the execution of Phase II.
Still, some critics argue that while planning consumes time and budgetary resources, it is not
appropriate to incorporate it into the WBS. They say that the WBS and any other type of planning
document merely represent the outcomes of the planning process. A plan is only considered
completed when the project actually begins. Thus, the work of the project itself is separate from
the plan that enabled the work to commence.
On this particular chicken-versus-egg issue, you decide whether you want to include the planning
of the project as a task or event in itself or simply have it represent a prelude activity for the actual
work of the project.
CAUTION
You can't skirt chicken-versus-egg issues, as they could make a significant impact
on your budget and overall project plans if you don't consider them.
What About Your Hours?
Should your activities and contributions to the project as project manager be listed in the work
breakdown structure? Some experts say no. They argue that project management represents pure
management—it is there from the beginning; it will be there at the end, and
● It is ongoing.

● It isn't a task.
● There are no milestones or deliverables attached to it.
● There are no events or activities that are dependent upon project management per se.
Those who argue that project management should be plotted in the WBS point out that although
all the above may be true, the act of managing a project is a vital project input and
● It involves labor.
● It consumes resources.
● It helps to achieve outcomes.
● It is clearly a valuable resource.
● It is part of the overall budget in the form of the project manager's salary.
For these reasons, I advocate that the project management function of a project be included in the
work breakdown structure.
Internal Resources Versus External Resources
As arduous as it may seem, constructing a WBS is relatively easy when all of the resources are
internal, such as your staff, equipment, and other component supporting project efforts. What
about when you have to rely on external resources, such as outside vendors, consultants, part-
time or supplemental staff, rented or leased facilities, and rented or leased equipment? Then the
job becomes more involved.
CAUTION
External project resources are more difficult to budget, schedule, and incorporate
at precisely the right time.
It can also be argued that monitoring the work of outside vendors, consultants or supplemental
staff is more challenging than working with internal staff. However, external human resources who
bill on an hourly or daily basis have a strong incentive to perform admirably, on time, every time.
Helping Your Staff When It's Over
In perfecting your WBS, have you accounted for the reintegration of your project staff back into

other parts of the organization as the project winds down? This is an issue that even veteran
project managers overlook. On some projects most of the staff work a uniform number of hours for
most of the project. If the project veers, perhaps they work longer until the project is back on
course. Sometimes, project staff work steadfastly right up to the final project outcome.
Since by design your project is a temporary engagement with a scheduled end, it is logical to
assume that the fate and future activity of project team members needs to be determined before
the project ends.
CAUTION
The project manager who overlooks the concerns of project staff who are
wondering about their immediate futures will find that as the project draws to a
close, project staff may start to lose focus or display symptoms of divided loyalty.
Project staff justifiably are concerned about what they will be doing next, whether it is moving on to
a new project, or finding their way back to their previous positions. You can't blame them, because
they have their own career and own futures to be concerned with.
Abrupt changes in job status, such as working full bore on a project to a nebulous status, can be
quite disconcerting to employees. Equally challenging for the project manager, however, is the
situation where the brunt of the project work occurs sometimes before the actual completion date.
Thus, many project staff members may be in a wind down phase—having worked more than 40
hours a week on the project at its midpoint and now perhaps spending 20 or less a week on it.
They now devote the rest of the time to some other project or back at their old position.
In such cases, the project manager needs to account for issues related to diverted attention,
divided loyalties, and the nagging problem of having several project staffers simply not having their
"heads" in the project anymore.
TIP
The WBS needs to reflect the added measure of staff meetings, reviews, and "tête-
à-têtes" that are often vital to maintain performance near the end of a project.
What Kinds of Tasks Comprise the WBS?
Whether you employ an outline, tree, or combination WBS, it is useful to point out some distinction
among tasks. Parallel tasks are those which can be undertaken at the same time as other tasks,
without impeding the project. For example, you may have several teams working on different
elements of the project that are not time or sequence related. Hence, they can all be making
progress without impeding any of the other teams.

Plain English
Parallel tasks
Two or more tasks that can be undertaken at the same time. This doesn't imply
that they have the same starting and ending times.
Dependent tasks are those that cannot begin until something else occurs. If you are constructing a
building, you first have to lay the foundation. Then, you can build the first floor, the second floor,
and the third floor. Obviously, you can't start with the fifth floor and then move to the third, not in
three-dimensional space as we know it.
Plain English
Dependent task
A task or subtask that cannot be initiated until a predecessor task or several
predecessor tasks are finished. Predecessor task Task that must be completed
before another task can commence.
The WBS is not the best tool for identifying the relationship between interdependent tasks. When
preparing a WSB outline, you want to proceed in chronological order, much as you want to do with
the tree approach. When you combine the outline and tree diagram type WBS, you end up with an
extended outline describing the tasks and subtasks associated with the elements on the tree
diagram. Thereafter, you can alter the position of the boxes to be in alignment with what takes
place and when. Hence, parallel tasks are on the same position on the chart. As you can see in
the figure below, some items, such as assignment and resource, occur at the same time.
Adding detail to the WBS sequence.

Dependent tasks necessarily have to have staggered positions. These can be joined by the arrows
that indicate the desired path of events or activities.
Milestones don't necessarily require any time or budget, as they represent the culmination of
events and tasks leading up to a milestone. A milestone may or may not involve a deliverable.
Nevertheless, milestones are important, particularly to project team members, because they offer
a visible point of demarcation. They let team members know that the project is (or is not)
proceeding according to plan. They represent a completion of sorts from which the project staff
can gain new energy, focus, and direction for what comes next.
Keeping the Big Picture in Mind
In refining the WBS to get it to its final form it is useful to revisit the basic definition of a project as
first introduced in Lesson 1, "So You're Going to Manage a Project?" The project is a
venture undertaken to achieve a desired outcome, within a specific timeframe and budget. The
outcome can be precisely defined and quantified. By definition, the project is temporary in nature.
It usually represents a unique activity to the host organization.
The challenge of establishing an effective WBS in many ways is likened to meeting a series of
constraints. For example
● Staff resources may be limited.
● The budget may be limited.
● Equipment and organizational resources may be limited.
● Crucial items on order may not arrive on time.

● Deliverables that you do prepare on time may be delayed by committees that have to go
through various approval procedures.
Meanwhile, you have a project to run and can't or don't want to spend the time waiting for
committee members to get their act together.
CAUTION
Even when deliverables are not the issue, there may be delays when you simply
need to have a yes or no answer. Key decision makers may be unreachable or too
bogged down with other issues to get back to you in what you consider to be a
timely manner.
Perhaps the most troublesome and hardest to plot on your WBS is the situation where progress on
your project is dependent upon the activities of some other department within your organization or
the success and timely combination of some other project.
CAUTION
If your project is delayed for days on end because some other project team has
not conveyed a key deliverable to you, you can quickly find yourself in a touchy
situation.
As you assemble your plan, you have to account for delays in the time that outside parties get
back to you, even though they promised that such delays would not occur!
TIP
From a planning standpoint, if a group is supposed to get back to you in two days,
consider their turnaround time to be four days. Only then would you build into your
plans a series of announcements and reminders focused on getting them to
respond.
The Big Picture Versus Endless Minutia
In your quest to assemble a comprehensive WBS, you may run the risk of going too far. As
mentioned in Lesson 3, "What Do You Want to Accomplish?" many a project manager has
made the unfortunate error of mapping out too many tasks. When you subdivide tasks into too
many subtasks, the WBS could possibly become more restrictive than useful.

CAUTION
Some project managers have been accused, hopefully unfairly, of charting
bathroom breaks for staffers.
You want to maintain control of the project and have a reasonable idea of what each project team
member is doing on any given day.
In assembling your project plan, however, you don't want to go overboard. Beware if you have
hundreds of items listed for each event or task area, and dozens and dozens of items scheduled
each day for each staffer!
Micromanagement isn't pretty—particularly when you get into the nitty gritty details of what
otherwise competent project team members should be responsible for. What is worse,
micromanagement techniques often focus on the wrong issues all together.
The goal in constructing a suitable WBS and being an effective project manager is to help your
staff members achieve predetermined milestones in pursuit of an overall desired project outcome.
From a mathematical standpoint, the longer the lists you have, generally the more difficult it will be
to complete everything on the list. In addition, the complexity of your job as project manager
increases many-fold.
What number of subtasks in support of an event or task represents the optimal? Nine is probably
too many and two is not enough. Someplace between three and five is probably optimal.
From Planning to Monitoring
Once the WBS is approved, your major responsibility for the duration of the project becomes that
of monitoring progress. This involves a variety of responsibilities including the following:
● Keeping tabs on the course and direction of the project, noting any variation from the
desired path.
● Modifying task descriptions as may become necessary as the project proceeds. Taking
immediate corrective action if it appears that the project is veering while continuing to
adhere to overall schedules and budgets.
● Working with team members, enhancing their understanding of their respective roles, team
building, offering praise and criticism, and incorporating their feedback.
● Controlling the scope of the project, which includes making sure that the desired level of
resources are expended on tasks and subtasks according to plan.

● Ensuring that roadblocks and barriers are effectively overcome and that you don't end up
winning some battles at the cost of losing the war—sometimes you can expend too much
effort in one area and end up leaving yourself in a weakened position someplace else.
● Maintaining effective relationships with the authorizing party and stakeholders, keeping
them informed, maintaining a "no surprises" type of approach, and incorporating their
feedback.
Lesson 6, "Keeping Your Eye on the Budget," examines the importance of expending
resources carefully including dealing with budgetary constraints, equipment constraints, and other
potential roadblocks. Thereafter, in Lesson 7, "Gantt Charts," Lesson 8, "PERT/CPM
Charts," and Lessons 10, "Choosing Project Management Software," and 11, "A
Sampling of Popular Programs," we dicuss how to manage more involved projects.
The 30-Second Recap
● In assembling your WBS, there are several chicken-versus-egg issues that must be
resolved, such as whether to plot your own activities as a project manager and whether to
include planning itself as a task.
● Project managers have an easier time maintaining control of internal resources including
staff, equipment, and facilities, than managing external resources including consultants,
rented equipment, and leased facilities.
● Your WBS needs to reflect realistic delays in getting feedback from committees following
their reception of your scheduled deliverables.
● Once you nail the WBS, you shift from a planning to a monitoring mode.

Lesson 6. Keeping Your Eye on the Budget
In this lesson, you learn how optimism gets in the way of controlling expenses, effective
approaches to budgeting, how to combine top-down and bottom-up budgeting techniques, and the
importance of building in slack.
Money Still Doesn't Grow on Trees
One of the primary responsibilities that you have as project manager is to keep close reins on the
budget. Your organization or whoever is funding the project enjoys hearing about cost overruns
about as much as having a root canal.
Too often the monetary resources allocated to a project (perhaps even before you stepped
aboard) have been underestimated. Why? Because of the irrational exuberance that the
authorizing party or stakeholder may have as to what can be achieved at what cost. This is not to
say that project managers don't have their own hand in underestimating cost.
The project manager often is charged with determining the project budget, as opposed to being
handed some figure from above. In such cases, it always pays to estimate on the high side. This is
true for many reasons:
● In most organizations, no matter how much you ask for, you can count on not getting it all.
TIP
You might as well ask for slightly more than your best calculations indicate,
thereby increasing the probability of getting close to the amount you actually seek.
● No matter how precise your calculations, how much slack you allow, or what kind of
contingencies you have considered, chances are your estimate is still low.
Plain English
Slack
Margin or extra room to accommodate anticipated potential short falls in planning.
Plain English
Murphy's Law

The age-old axiom stating that if something can go wrong, it will go wrong.
Parkinson's Law
Work expands so as to fill the time allotted for its completion.
● In ever-changing business, social, and technological environments, no one has a lock on
the future even three months out, let alone three years out. You simply have to build into
your budget extra margins beyond those that seem initially commensurate with the overall
level of work to be performed and outcome to be achieved.
Is it foolhardy to prepare a budget that merely reflects the best computation as to what the sum
ought to be? Probably.
Experience Pays
Your level of experience as a project manager plays a big part in your ability to understand the real
monetary costs in conducting the project. For example, a highly skilled laborer may be able to
work wonders with less than top-of-the-line equipment, whereas an entry-level laborer is likely to
be less productive in the same situation.
Distorted expectations
Another problem is related to your own competence. The more competent you are as a project
manager and as a career professional in general, the greater the tendency for you to
underestimate the time necessary for project staff members to complete a job. You tend to
envision the completion of a job through the eyes of your own level of competency. Even if you
discount for newly-hired and inexperienced staff, you still tend to regard jobs in the way that you
might have tackled them when you were newly hired. Hence, you end up underestimating the time
required to complete the job with the staff that you do have by 5, 10, 15 percent or more.
The preceding phenomenon has a corollary in professional sports, particularly in NBA basketball.
Many of the superstars who went on to become head coach failed miserably because they could
not budget for the lower competency levels of players on their current roster. Such coaches
thought back to their own days and what they were able to achieve, perhaps even thought of
competent teammates and competent players from other teams. When coaching their current
team, they couldn't shake their preconceived notion of what a player was supposed to be able to
do, the rate at which a player learned, and the skill level that the player could acquire.
Hidden Costs
An experienced project manager also knows that any time you rely on external sources to proceed

on a project, such as subcontractors, there are hidden costs involved. The subcontractor may work
for a flat fee or lump sum amount, and, if so, it's easy to pinpoint that figure and plug it into the
overall budget. However, what about your time and effort, or project team members' time and
effort, in carefully preparing guidelines for subcontractors, working with them to ensure smooth
operation, and consuming time in extra meetings, phone calls, and e-mails? What about the extra
reporting and other administrative tasks associated with working with outside vendors? Such
factors ultimately impact the budget.
CAUTION
The cumulative impact of underestimating time can quickly put your project in
jeopardy. Even if you apply a safety margin to your estimate, the level of safety
margin is applied through the eyes of your own personal competency. Hence, you
need to get help when preparing the budget.
Crises Will Happen
The experienced project manager expects that one or more crises will occur in the course of the
project. The inexperienced project manager may have been forewarned, but still is unprepared.
Even experienced project managers know that sometimes you reach a point of desperation in the
project—you must have something done by a certain time and need to move heaven and earth to
do it. You may have to pay exorbitant short-term costs to procure a vital resource, work around the
clock, plead for added help, make thinly veiled threats, or scramble like a rabbit in the brush to
keep the project on time. All such instances have a potentially dramatic effect on the budget.
Traditional Approaches to Budgeting
If you're managing a project that remotely resembles anything else anyone has managed in your
organization, you may be able to extract some clues as to how to prepare a real-world budget for
your project. Obviously, you never want to merely lift the cost figures from one project and apply it
to yours.
TIP
There may be cost elements of a previous project that are akin to some elements
of your project, so that's as good a place to start as any.
Many industries have already codified cost elements associated with various jobs. Printers have
elaborate cost estimate sheets. Their estimators can plug in the particulars of a customer's request
and quickly yield a cost estimate for the customer. With the many variables involved in estimating
the cost of a printing job, however, the estimator can end up underestimating the true costs and
hence diminish his profit.

In construction, the cost estimator has comparable tools for the construction industry. The
estimator may know the costs for each 2' by 4', brick, cinder block, and glass panel.
Still, you hear stories about printing jobs that ended up costing 50 percent or more of the original
estimate, of companies taking a bath on projects because the final costs were so out of whack with
reality. Particularly in civic and civil engineering projects, cost overruns in the millions of dollars
make for regular news features in every community. What is going on here? Why would
experienced organizations that have the most sophisticated cost estimating software, and
undoubtedly have performed hundreds of jobs for clients and customers be off the mark so often
and sometimes so wildly? It all comes down to the skill of the person doing the budget estimate,
the assumptions he or she relies upon, and the approach he or she takes.
TIP
By knowing the dimensions of the building, the number of floors, and all the other
attributes via project blueprints to the best of his ability, the experienced estimator
determines the overall cost of the construction project.
Traditional Measures
Let's discuss some traditional measures for preparing a budget, followed by a look at the cost
estimation traps that you don't want to fall into.
Top-Down Budgeting
Using this approach, a project manager surveys the authorizing party or committee, stakeholders,
and certainly top and middle managers where relevant. The project manager would also conduct a
massive hunt for all previous cost data on projects of a remotely similar nature. He would then
compile the costs associated with each phase (if the project is divided into phases), specific events
or tasks, or even subtasks.
To further hedge his bet, he might even enroll project management staff if they have been
identified in advance, and get their estimates of the time (and hence cost) for specific tasks and
subtasks. He would then refine his own estimates, which now may be somewhat higher than the
figure his peers may have arrived at. In any case, he would represent his data to the authorizing
party.
TIP
More often than not, the wise project manager lobbies for a larger budget than the
authorizing party feels is necessary.

Even if the project manager ends up yielding to the wishes of the authorizing party (and when
hasn't this happened?) and accepts a lower budget figure, there are some safeguards built into the
top-down budgeting approach. The judgments of senior, top-level, highly experienced executives
and managers likely already factor in budgetary safety margins and contingencies.
In addition, the project manager may be one project manager of many calling on the top manager
or executive. Hence, the amount allocated for his budget is probably in alignment and consistent
with the overall needs of the department, division, or entire organization. A highly persuasive
project manager may be able to lobby for a few percent more in funding, but probably not much
more unless there are extraordinary circumstances.
Bottom-Up Budgeting
As the name implies, this approach to budgeting takes the reverse course. After constructing work
breakdown structure, the project manager consults with project staff members (presumably pre-
identified) who offer highly detailed estimates of the budget required for each task and subtask at
every step along the way. In fact, the project manager routinely surveys the staff once the project
begins to continue to formulate the bottom-up budget, which he then submits to the higher-ups.
The project manager keeps a sharp eye on trends—possibly on a daily basis, more likely on a
weekly or biweekly basis, and certainly between one task and another.
As project team members proceed up the learning curve, they are often able to achieve operating
efficiencies that enable the overall project team to proceed on some aspects of the project with
much greater productivity, and hence lower costs. This isn't to say that the project won't hit a snag
or is otherwise immune to the potential cost overruns as discussed throughout this lesson.
The bottom-up budgeting approach holds great potential but also carries great risk. Potentially, a
highly detailed, reasonably accurate compilation of costs can be achieved using this method. The
danger is that if the project manager does not include all cost elements of the project, then the cost
estimate understandably can be off by a wide margin.
CAUTION
In Project Management, Meredith and Mantel state, "It is far more difficult to
develop a complete list of tasks when constructing that list from the bottom up than
from the top down."
In addition, if project management staff suspects that top management is on the lookout to cut
budgets, then they may resort to overstating their case. This results in the project manager
presenting a sum to the higher-ups that is larger than would otherwise be derived. In turn, the
potential for the project budget being whittled away increases. What a process!
Nevertheless, as more and more organizations request that their project managers engage in
project management, it makes sense to regularly solicit the input from those who are actually
doing the work. Line workers in any industry have a first person, hands on connection to what is

occurring—whereas staff usually are somewhat distant observers often relying on compiled
information.
When project staff gets to participate in the preparation of budgets, if those budgets are cut, at
least they had some role in the process and hence "will accept the result with a minimum of
grumbling," according to Meredith and Mantel. "Involvement is also a good managerial training
technique, giving junior managers valuable experience in budget preparation as well as the
knowledge of the operations required to generate a budget."
Top-Down and Bottom-Up Budgeting
Perhaps the most effective approach combines the two budgeting techniques discussed thus far. It
involves gathering all the data and input from top executives and then soliciting input from project
management staff and adjusting estimates accordingly.
CAUTION
Despite some wonderful benefits, most organizations and most projects do not rely
upon bottom-up budgeting. Top managers are reluctant to relinquish control of one
of their chief sources of power— allocating monies—and sometimes mistrust
subordinates who they may believe routinely overstate project needs.
Regardless of the approach, one needs to account for the ever-present disparity between actual
hours on the job and actual hours worked. No project staff person working an eight-hour day offers
eight hours of unwavering productivity. There are breaks, timeouts, lapses, unwarranted phone
calls, Internet searches, and who knows what else going on. Hence, you may wish to apply a 10
percent to 15 percent increase in the estimates submitted by project management staff in regard to
the amount of time it will take them to accomplish tasks and subtasks.
If a particular task initially was determined to cost $1,000 (the worker's hourly rate times the
number of hours), you would then allocate $1,100 or $1,150 dollars to more closely reflect the true
costs to the organization. Taking the midpoint of your calculation, $1,135 dollars, you would plug
that into the figures you then present back to top management.
Reverting back and forth between top management and line workers in the quest to pinpoint
accurate costs is not a rare phenomenon among project managers. In many respects, budget
approvals require a series of periodic authorizations. Depending upon how your organization views
project management and earlier protocols established, your project may only proceed based on a
constant flow of budgetary checks and balances. The following table is one example of a project
budget with actual and budgeted amounts recorded.
TIP
Virtually all the project software programs available (see Lessons 10, "Choosing

why some costs may not be budgeted accurately.
Suppose you are charged with managing a project to design some new proprietary software
system that will be one of the leading products for your company. Consider the following:
● There will be a variety of system development costs including defining system
requirements, designing the system, designing infrastructure, coding, unit testing,
networking, and integrating, as well as documentation, training materials, possibly
consulting costs, possibly licenses, and fees.
● Maybe you have staff costs as well to identify, configure, and purchase hardware, to install
it, and to maintain it. Similar staff costs may accrue to acquiring software.
● There could be staff travel, transportation, hotel and meal expense, conference room and
equipment fees, fees for coffee service, snacks, and other refreshments.
● There are costs involved in having top management, outside vendors, and clients and
customers attend briefings.
● There could be costs associated with testing and refinement, operations, maintenance,
refinement, debugging, beta testing, surveying, and compiling data.
CAUTION
Little or no prior data may be available that the project manager can draw upon to
help estimate such a multifaceted project. Budgets from previous projects may
serve to confuse and complicate issues, rather than clarify and simplify them.
In particular, look out for these estimation faux pas:
● Inexperienced estimators who don't follow any consistent methodology in preparing
estimates overlook some cost items entirely, or tend to be too optimistic about what is
needed to do the job.
● If you are managing a project that has a direct payoff for a specific client, you have to
consider that your organization had to bid very tightly against considerable competition.
Perhaps they bid too tightly to get the job done (low-balled to win a contract award). It now
becomes your responsibility to work within these constraints. In such cases, you find
yourself trying to trim costs every step of the way, even when there is nothing left to trim.
Sometimes organizations intentionally bid on projects they know will be money losers.
They do this in the hopes that it will establish a relationship with the customer that will lead
to other, more lucrative projects. This is little solace for you if you are the one trying to
grind out every ounce of productivity you can from an already overworked project staff or

having to use plants and equipment to the max.
● In some organizations the most careful and comprehensive project budgets end up being
slashed by some senior managers or executives who are operating based on some
agenda to which you are not privy. In his book The New Project Management, author J.D.
Frame says, "Political meddling in cost and schedule estimating is an everyday occurrence
in some organizations." The best antidote against such meddling, says the author, is "the
establishment of objective, clearly defined procedures for project selection …" which
should be set up so that no one, "no matter how powerful, can unilaterally impose their will
on the selection process."
The issues raised in this lesson point to the ever present need for project managers to build an
appropriate degree of slack into their estimates. This is not to say that you are being dishonest or
disloyal to your organization, but rather acknowledging the ruthless rules of project management
reality—you hardly ever get the funds you need, and even then, stuff happens!
The 30-Second Recap
● Because of irrational exuberance, too often the monetary resources allocated to a project
(perhaps even before you stepped aboard) have been underestimated.
● In most organizations, no matter how much you ask for, you can count on not getting it all.
● Perhaps the most effective approach to budgeting combines the top-down and bottom-up
techniques.
● Build an appropriate degree of slack into your estimates!